US grey tin box shifter Dell’s annual sales slumped to £69.8 billion, down 14 per cent from the previous year and £10.7 billion less than its £80.5 billion record in 2022.
The outfit’s top-selling infrastructure category dropped 12 per cent to £26.7 billion as global customers tightened their belts despite the hype around generative AI.
Dell’s senior vice president and treasurer, Tyler Johnson, moaned that the outfit was waiting for the big corporate, global, multinational business to return. They’re cautious because of the economy, politics and interest rates.
Dell’s servers and networking business fell 14 per cent to £13.9 billion in sales. Storage did slightly better, down nine per cent.
Dell COO Jeff Clarke said FY24 didn’t go as planned.
“But we did our best. We adapted to the changing market, focused on what we can control, and expanded into the high-growth AI opportunity. Our operating margin rate improved as we delivered higher gross margins with disciplined cost management.”
Dell axed shedloads of staff in 2023, with 6,650 gone in February and more in August.
Dell’s PC sales also nosedived in 2023, down 16 per cent overall and 28 per cent among consumers. This was after dropping 20 per cent last year.
Clarke said PCs needed to do better.
“Do I expect the PC market to be more significant in 2024 than 2023? Yes. Is the PC market bigger in the second half of 2024 than in the first? Absolutely. PCs have a chance in the second half because the market is vast and needs a refresh.”
For the fourth quarter, Dell’s sales were £17.6 billion, down 10 per cent yearly, with a net income of £908 million, for an earnings per share of £1.26, up 89 per cent.
Analysts quizzed Clarke about generative AI and how much of the £120 billion market Dell wants. He was asked if Dell’s leading positions in server and storage would help in this new market.
“The truth is we are leading the market, and we expect to keep leading the market with our broad capabilities. We can get a more significant share of this market than in traditional markets.
“That includes the PC. What makes us special and different is that we can reach all kinds of customers, from the smallest to the biggest in the world.”
Clarke said Dell has boosted the Dell Generative AI Solutions portfolio with support for the AMD Instinct MI300X accelerator in Dell PowerEdge XE9680 servers and the new Dell Validated Design for Generative AI with AMD ROCm-powered AI frameworks.
Dell introduced new data storage improvements and planned validation with the Nvidia DGX SuperPOD AI infrastructure, helping customers access data for AI workloads with Dell PowerScale systems.
He said Dell will have the broadest range of commercial AI laptops and mobile workstations that will come with AI acceleration with the addition of the Neural Processing Unit 2 (NPU).
Despite the gloomy numbers, Dell’s stock soared 18.25 per cent in after-hours trading after the company beat analyst expectations and said it would increase its annual cash dividend by 20 per cent to £1.41 per share.
Dell is hopeful about the rest of the year. The firm expects to grow in both infrastructure and PC sales this year.
Dell CFO Yvonne McGill said several trends give us confidence in FY25.
“First, the momentum around AI. Second, the improvement we are seeing in traditional servers and third, the old PC market that is due for a refresh.”
Dell said it expects revenue for this year to be between £71.8-£75 billion, with ISG to grow in the mid-teens “fuelled by AI.”
McGill said Dell’s CSG business was on track to grow in the low single-digits.
